A financial institution is suing solicitor Gerald Kean over alleged “very serious” failure to comply with an undertaking to return to it the title deeds of two properties bought some years ago by his ex-girlfriend and former model, Dolores Corcoran.
The Educational Building Society (EBS) claims those deeds were held on trust for it and it has a first legal mortgage over both properties under security for a 2004 loan. They are a residential property at Portnahully, Carrigeen, Waterford, and a commercial property at Henrietta Street, Waterford.
It claims that 2004 loan was not repaid under a later refinancing agreement between Ms Corcoran and Permanent TSB under which three other loans made by EBS to her between 2004 and 2006 were repaid.
Mr Kean’s firm, based at Upper Pembroke Street, Dublin, acted for Ms Corcoran in dealings with EBS and PTSB, Andrew Fitzpatrick SC, for EBS, told the High Court.
The firm got the title deeds to both properties on foot of an undertaking, signed by Mr Kean, to hold them on trust for EBS and return them to it on demand, counsel said.
This was a “straightforward” undertaking entered into by solicitors every day of the week without which the conveyancing system would not operate properly, he said.
Due to an apparent “mistake” in Mr Kean’s firm, it appeared it had not realised until July 2008 that one of the loans by EBS to Ms Corcoran, a 2004 loan secured by a first legal charge on the two properties at issue, remained unpaid, he said.
Despite EBS making several requests for the title deeds from 2009, Mr Kean had undertaken to PTSB he would get it a first legal charge over the two properties, counsel said.
That undertaking, necessary for the refinancing arrangements, was “irreconcilable” with the earlier undertaking to return the title deeds to EBS, he said.
The firm had inaccurately certified to PTSB its mortgage ranked as a first legal mortgage over the relevant properties when that was not the case and EBS remains registered as the first legal charge holder over the properties, he said.
What was “markedly wrong” here was “the decision to pass the title deeds to our properties, held on trust for us” and telling PTSB it had a first legal charge and that he had taken action against EBS when he has not, counsel said.
The title deeds are now with PTSB and Mr Kean’s position appears to be it is not possible to get them back which is just “too bad” for EBS, he said. There was no evidence Mr Kean had asked PTSB to return the deeds, counsel said.
The only means of discharging the undertaking to EBS was if the outstanding unpaid loan was repaid but the borrower “for her own reasons” has declined to do so, Mr Fitzpatrick said.
Counsel was opening proceedings by EBS against Mr Kean, who denies the claims.
During the opening, Richard Kean SC, for Mr Kean, said the case has potential for “significant reputational damage” and his side “absolutely refutes” the “a la carte presentation” of the evidence.
The solicitor's obligation is to return the deeds or redeem the loan and the loans Keans were asked about by EBS were redeemed, he said.
The case comes down to very net issues including when exactly loan redemption figures were sent by EBS and when the Kean firm became aware of cross-securitisation of loans on some properties, counsel said.
"Systemic” failures by EBS in relation to its handling of the law firm’s request for the loan redemption figures would be “exposed” by the evidence, he added.
Mr Fitzpatrick disputed the alleged failures and said the defendant had advanced inconsistent bases for his arguments he did not have to return the deeds.
The case continues.